On May 12, 2015, Verizon announced its acquisition of digital media publication giant and one-time top internet service provider AOL. As the news spread across the Internet, the majority of media outlets reported the deal was driven by Verizon’s desire for mobile and video ad technology. But at the same time, the deal may have big implications for Verizon’s online video strategy.
With its acquisition of AOL, Verizon could be working towards producing more online video and competing with AT&T, which currently owns a portion of YouTube multi-channel network Fullscreen. Leaning on AOL’s solid track record of original video content while utilizing the digital publisher’s video production resources could put Verizon on track to up its online video game.
“Verizon needed a compelling content story to make it stand out,” explained Manatt Digital Media CEO Peter Csathy in an email. “AOL’s content development expertise and ad revenue-generating expertise are two critical pieces that Verizon did not have. So, it bought [AOL] instead so that it could potentially compete effectively in the mobile-driven video content world where millennials are, and where marketers want to be.”
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The wheels for this kind of video strategy for Verizon are, after all, already in motion. Back in March 2015, Verizon announced it was partnering with MCN AwesomenessTV for original content on an upcoming (yet unspecified) OTT platform. That deal will bring over 200 hours of AwesomenessTV content to a new Verizon channel for the mobile giant’s consumers.
However, if the general consensus is that Verizon deal was reportedly based on AOL’s sophisticated ad technology, more so than on the media company’s content publishing merits, that could mean bad news for AOL’s online video efforts. If Verizon keeps its eyes predominantly focused on using AOL’s ad tech to improve its marketing efforts, original video entertainment may fall by the wayside, at least temporarily. There have even been rumors Verizon will sell off AOL’s media properties such as TechCrunch and The Huffington Post (which is heavily involved with new video initiatives itself).
But Shahrzad Rafati, founder and CEO of BroadbandTV, thinks Verizon is “too smart” to overlook all its opportunities with AOL. “[Verizon] will make good use of AOL’s mobile ad serving tech in addition to AOL’s Adaptv programmatic ad buying platform,” Rafati said in an email. “They have a much clearer path to realize a win with programmatic, but they will also unlock value on a variety of opportunities related with AOL assets.”
Csathy agrees. “The driving factor for this deal is mobile video period — and everything that goes with it,” the executive said. “Yes, ad-tech is core — but, even more importantly, AOL brings video content and content development expertise that it needs to feed the ad revenue-generating beast.”
Additionally, Csathy believes original video content from AOL will be a key factor in helping Verizon differentiate its FiOS internet and television service, not just its mobile technology. “AOL produces significant longer-form content and just announced some major content partnerships, including with NBC, at the digital NewFronts,” the Manatt CEO said. “That content can live exclusively on FiOS, potentially increasing the value of FiOS in the minds of consumers.”
By integrating content into FiOS, Verizon could end up winning even bigger opportunities with the AOL acquisition than just mobile and video ad tech. As Csathy put it, “If Verizon can play effectively both on the small screen (mobile) and larger screen (television)… [it can] use its content to drive customer acquisition, retention and monetization on both ends in a virtual cycle of sorts.”